How to get Patent Box relief

The Patent Box is a tax break aimed at encouraging innovative companies to exploit their inventions in the UK - i.e. to employ UK staff and record their profits in the UK.

If your company is making a profit, or soon to be making a profit, as a founder you're probably starting to get concerned about the corporation tax liabilities which will accumulate. 20% seems reasonable when you're not paying it yet, but when you're staring at a £100k+ CT bill when only a few years ago, you had no profit whatsoever, it can be fairly disheartening.

If you have a product that is patentable in some way, here's some good news: you can substantially reduce that CT bill by using the Patent Box scheme. This is somewhat similar to the R&D Tax Credits scheme, and in fact is being administered by the same people at HMRC, but it works only for consistently profitable companies (i.e. you shouldn't sign up for it if you expect to become unprofitable soon). It can result in up to a halving of your CT bill (though in practice the reduction for SMEs will be closer to 7.5% off the 20%).

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UK Government Funding Faqs

Want to know more about UK Government funding? We have written and compiled this list of practical, useful articles, covering most aspects of the key topics that we are experts in: R&D Tax Credits, TSB Smart Grants, SEIS - and don't forget our page on startup funding in the UK.

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